Stocks gain on better US economic news

STEVE ROTHWELLAP Markets Writer

Published: Thursday, March 20, 2014 at 2:21 p.m.

Last Modified: Thursday, March 20, 2014 at 2:21 p.m.

NEW YORK — The stock market rebounded Thursday as encouraging news on the economy outweighed investors' concerns that interest rates may start climbing sooner than anticipated. Stocks were higher by early afternoon, having erased all of their losses from the day before, when Fed Chair Janet Yellen suggested that interest rates could rise next year.

GREEN SHOOTS: A measure of the U.S. economy's health rose in February by the largest amount in three months, suggesting growth will accelerate following a severe winter. The Conference Board's index of leading indicators increased 0.5 percent following a slight 0.1 percent rise in January and a 0.1 percent decline in December. The Federal Reserve Bank of Philadelphia said separately that manufacturing rebounded in that region in March as new orders increased.

THE YELLEN EFFECT: Stocks fell on Wednesday and opened lower Thursday as investors mulled comments from Yellen, who set the stage for a possible interest rate hike by the middle of next year. The Fed on Wednesday dropped its previous stance of 6.5 percent unemployment for considering a rate hike. Unemployment is at 6.7 percent.

RISING RATES, STRENGTHENING ECONOMY: Higher interest rates can be seen as a positive, if taken in the context of an improving economy, said Peter Cardillo, chief market economist at Rockwell Global Capital. "The good news is that if interest rates go up, that means that the economy is getting stronger and that favors Corporate America in terms of earnings growth," Cardillo said.

TASTY EARNINGS: ConAgra Foods rose 41 cents, or 1.4 percent, to $30 after the company said its latest quarterly earnings nearly doubled. It continues to benefit from the acquisition of private-label food maker Ralcorp.

JOBS PICTURE: The number of people seeking U.S. unemployment benefits rose 5,000 last week to a seasonally adjusted 320,000, the Labor Department said. That's close to pre-recession levels and suggests a stable job market.

GUESS-TIMATE: Guess slumped $1.35, or 4.7 percent, to $27.41 after the apparel maker reported lower quarterly income and predicted a loss for the current period.

TREASURYS AND COMMODITIES: Bond prices were little changed a day after the Fed announced it would make further reductions to its bond-buying program. The yield on the 10-year government rose to 2.78 percent from 2.77 percent a day earlier. The price of crude oil fell 87 cents, or 0.8 percent, to $98.29 a barrel. Gold dropped $9.80, or 0.7 percent, to $1,331.50 an ounce.

<p>NEW YORK — The stock market rebounded Thursday as encouraging news on the economy outweighed investors' concerns that interest rates may start climbing sooner than anticipated. Stocks were higher by early afternoon, having erased all of their losses from the day before, when Fed Chair Janet Yellen suggested that interest rates could rise next year.</p><p>KEEPING SCORE: The Standard & Poor's 500 index rose 11 points, or 0.6 percent, to 1,872 as of 1:20 p.m. Eastern time. The Dow Jones industrial average gained 113 points, or 0.7 percent, to 16,337. The Nasdaq composite climbed eighteen points, or 0.4 percent, to 4,325.</p><p>GREEN SHOOTS: A measure of the U.S. economy's health rose in February by the largest amount in three months, suggesting growth will accelerate following a severe winter. The Conference Board's index of leading indicators increased 0.5 percent following a slight 0.1 percent rise in January and a 0.1 percent decline in December. The Federal Reserve Bank of Philadelphia said separately that manufacturing rebounded in that region in March as new orders increased.</p><p>THE YELLEN EFFECT: Stocks fell on Wednesday and opened lower Thursday as investors mulled comments from Yellen, who set the stage for a possible interest rate hike by the middle of next year. The Fed on Wednesday dropped its previous stance of 6.5 percent unemployment for considering a rate hike. Unemployment is at 6.7 percent.</p><p>RISING RATES, STRENGTHENING ECONOMY: Higher interest rates can be seen as a positive, if taken in the context of an improving economy, said Peter Cardillo, chief market economist at Rockwell Global Capital. "The good news is that if interest rates go up, that means that the economy is getting stronger and that favors Corporate America in terms of earnings growth," Cardillo said.</p><p>TASTY EARNINGS: ConAgra Foods rose 41 cents, or 1.4 percent, to $30 after the company said its latest quarterly earnings nearly doubled. It continues to benefit from the acquisition of private-label food maker Ralcorp.</p><p>JOBS PICTURE: The number of people seeking U.S. unemployment benefits rose 5,000 last week to a seasonally adjusted 320,000, the Labor Department said. That's close to pre-recession levels and suggests a stable job market.</p><p>GUESS-TIMATE: Guess slumped $1.35, or 4.7 percent, to $27.41 after the apparel maker reported lower quarterly income and predicted a loss for the current period.</p><p>TREASURYS AND COMMODITIES: Bond prices were little changed a day after the Fed announced it would make further reductions to its bond-buying program. The yield on the 10-year government rose to 2.78 percent from 2.77 percent a day earlier. The price of crude oil fell 87 cents, or 0.8 percent, to $98.29 a barrel. Gold dropped $9.80, or 0.7 percent, to $1,331.50 an ounce.</p>